Yes, someone you blocked can mention your username on Instagram, but this mention won't appear in your Activity. If you block someone and then change your username, they won't be able to mention you unless they know your new username.

If someone with a private profile mentions someone who isn't one of their approved followers on a photo or video, the person mentioned won't get a notification in the You section of Activity and they won't get a push notification.

If someone with a private profile leaves a comment on a photo that a public Instagrammer uploaded, their comment will be visible and their username will be clickable below that photo.

If someone with a private profile sends a photo/video to a specific group of people with Instagram Direct, only people who follow the private profile will be able to see the comments or mentions associated with that photo/video.